GBPUSD Sits in a Pivotal Price Zone after Dropping 6.36% in 3 Weeks

GBPUSD is in a price zone that has not served as a consolidation zone.

GBPUSD fell 6.36% from peak to trough in a span of 17 trading days (23 actual days). Now GBPUSD is in a price zone between 1.34879 and 1.35939 that has been radioactive in recent history. What is the history of this price zone and what does it mean going forward?

A Present Look at GBPUSD in this Radioactive Price Zone

In the past two years, this price zone has served as a very weak support that is a significant resistance. The price fell through and out of it in the wake of Brexit. The price would re-emerge in this zone in September 2017 and then fall right back out of it in short order.

In the first effort to test this zone as a support since the Brexit vote and aftermath of 2016, GBPUSD has slowed down in terms of momentum upon entry. There are major differences between present circumstances and those from June 2016. Not to mention that volatility is significantly lower. A 6.36% peak-to-trough drop is not much compared to June 2016.

The only time prior to Brexit that GBPUSD had entered this price zone was during the trough of the Financial Crisis in January 2009.

The zone held up as a resistance every time it was entered or tested with January 2018 serving as the exception. The way to look at is from one of two camps:

No exceptional events take place during the next two weeks, GBPUSD will bounce back up.

New normal for GBPUSD as it will not reclaim its luster in the transitional period out of Brexit, this is a zone that does not require a significant event to not only enter the zone, but to break through a support.

Last week, the Bank of England held steady with their interest rate at .50%. There were expectations that interest rates would rise, but negative economic figures have delayed this tightening. Only with a significant economic improvement would the interest rates rise in either August or November 2018, but there’s a bit of pessimism.

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